Citigroup plans to sue over failed Wachovia deal

Citigroup backed out of negotiations to acquire Wachovia yesterday, and indicated that it is seeking $60 billion in direct and punitive damages from Wachovia and Wells Fargo, saying that it had first dibs on Wachovia and “hundreds of billions of dollars of value would have been seriously threatened” if it had not offered to buy the bank. Citigroup offered a $2.1 billion bid for Wachovia’s banking operations, while Wells Fargo bid to acquire the entire company for $15 billion in stock, but the value has declined to just under $12 billion because of falling stock prices. Banking analysts believe a Wells-Wachovia merger would be better because the banks operate on opposite coasts.